AR242

An Assembly Resolution opposing the proposed $225 million settlement in a lawsuit brought by the State of New Jersey against ExxonMobil for natural resource damages at the Bayway and Bayonne oil refinery sites and at certain other sites in New Jersey.

Whereas, The “Water Pollution Control Act,” the “Spill Compensation and Control Act,” and the common law in New Jersey all require the State of New Jersey to act as a trustee on behalf of its citizens with respect to its natural resources and give the State the authority to collect money damages as compensation for the destruction of natural resources resulting from the release of hazardous substances into the environment; and

Whereas, Prior to the last decade of the 20th century, this authority was generally not exercised by the State; and

Whereas, Society has become increasingly aware of the damage being caused to natural resources as the result of longstanding abuses of the environment; and

Whereas, In or about 2001, the New Jersey Department of Environmental Protection (DEP) undertook a comprehensive effort to address more than 4,000 potential claims for natural resource damages; and

Whereas, From 2004 to 2009, the State made 151 claims for natural resource damages, but since Governor Christie took office only one such claim has been made; and

Whereas, Since the late 19th century, ExxonMobil Corporation (ExxonMobil) or its predecessors operated oil refineries and associated facilities in Linden, New Jersey (the “Bayway facility” or “Bayway site”) and Bayonne, New Jersey (the “Bayonne facility” or “Bayonne site”), and the operation of those facilities resulted in large, damaging, and documented discharges to the environment; and

Whereas, During the course of operations at these facilities, millions of gallons of crude oil and refined products, seven to 17 feet thick in some cases, and containing hazardous substances such as polycyclic aromatic hydrocarbons (PAHs), chromium, and arsenic, were lost through improper disposal of wastes, spills, and leaks; and

Whereas, In 1977 alone, at least seven million gallons of oil were released into the soil and groundwater underlying a portion of the Bayonne site; and

Whereas, In 1991 ExxonMobil entered into an Administrative Consent Order (ACO) agreeing to remediate the Bayway and Bayonne sites, and under that ACO and subsequent ACOs, which continue in force, ExxonMobil must thoroughly investigate and fully remediate contamination at both facilities, and the 1991 ACO specifically further provides that the State is not waiving any of its rights to pursue claims for natural resource damages; and

Whereas, Between 2001 and 2004, DEP engaged in settlement discussions with ExxonMobil in an effort to address the injuries to natural resources, including loss or impairment of ecological functions and the deprivation of natural resource services such as water supply, recreation, and ecological services, resulting from discharges from the Bayway and Bayonne facilities, but those settlement discussions were ultimately unsuccessful; and

Whereas, In 2004, DEP instituted litigation against ExxonMobil seeking recovery for natural resource damages, and among other things the lawsuit sought compensation from ExxonMobil for the contamination and loss of use of more than 1,500 acres of wetlands, marshes, meadows, and waters; and

Whereas, A number of important court rulings have been made in the case since it began, including a ruling in 2007 that compensatory damages can be part of a natural resource damages claim, a ruling in 2009 that the “Spill Compensation and Control Act” can be applied retroactively, and a ruling in 2013 that, as a matter of law, ExxonMobil caused the injuries at issue, and that a damages-only phase of the trial would begin in 2014; and

Whereas, DEP’s own experts have estimated that restoration of former wetlands, meadows, forests, and intertidal habitat, and compensation for decades of contamination, at the Bayway and Bayonne sites would cost $8.9 billion, including $2.6 billion for primary restoration and $6.3 billion for compensatory damages, and $1.2 million for assessment costs; and

Whereas, Over a period of 56 days in 2014, the damages phase of the trial was conducted in the Law Division of the Superior Court, and in January 2015 it was reported that the judge having jurisdiction over the litigation was prepared to issue a ruling; and

Whereas, In March 2015 it was publicly reported that the State and ExxonMobil had negotiated a settlement, and on April 6, 2015, DEP published notice of a proposed settlement in the matter of New Jersey Department of Environmental Protection v. Exxon Mobil Corporation, Docket No. UNN-L-3026-04; and

Whereas, The elements of the proposed settlement are as follows:

· DEP will release ExxonMobil from all natural resource damages claims and from liability under any other theories of law from the Bayway and Bayonne facilities, including areas to which any contaminants discharged from those facilities may have migrated;

· The natural resource damages claims relating to surface waters in the vicinity of the two refineries are dismissed without prejudice to DEP’s ability to reassert those claims, provided that DEP will not do so until a formal natural resource damages assessment has been completed and DEP has identified any and all other potentially responsible parties against whom it would bring claims in addition to ExxonMobil;

· Any decision on the remediation of Morses Creek will be deferred until the cessation of refining operations at the Bayway facility (Morses Creek is a waterbody located immediately adjacent to the Bayway facility, which receives processed wastewater discharge from that facility and which, according to proofs offered by DEP, has been heavily impacted over the decades during which the refinery has operated);

· ExxonMobil is released from all natural resource damages claims and/or liability under any other theory of liability relating to all ExxonMobil retail stations throughout the State of New Jersey, except for claims relating to the release of MTBE (a gasoline additive used to improve air quality), which is the subject of separate litigation between DEP and ExxonMobil;

· ExxonMobil is released from any and all natural resource damages claims and/or for any other theory of liability relating to the following 16 different facilities owned or operated by ExxonMobil throughout the State of New Jersey:

1. Atlantic City Terminal 98-ACP: 2141 Absecon Blvd, Atlantic City

2. Atlantic City Terminal #3001: New Jersey & Magellan Aves., Atlantic City

3. Edison Research Lab: 2195 Route 27, Edison

4. Edison Synthetics Plant: 2195 Route 27, Edison

5. Flemington Terminal: 198 Routes 202 & 31, Flemington

6. Florham Park Facility: 180 Park Ave, Florham Park

7. Trenton Terminal #29005: 2785 Lamberton Rd, Hamilton

8. Linden Technical Center: 1900 E Linden Ave, Linden

9. Linden Terminal #29074: 3700 S Wood Ave, Linden

10. Long Branch Terminal: 160 West End Ave, Long Branch

11. Morristown Municipal Airport Fuel Farm: 8 Airport Rd, Morristown

12. Paulsboro Terminal #3045: 800 Billingsport Rd, Paulsboro

13. Paulsboro Lube Plant #29004: 1001 Billingsport Rd, Paulsboro

14. Former Tomah Facility: 32 Pennsgrove-Pedricktown Rd, Pedricktown

15. Pennington Facility: 311 Pennington-Rocky Hill Rd, Pennington

16. Teterboro Airport Fuel Farm: Malcom Ave, Teterboro

· ExxonMobil will pay the State of New Jersey the sum of $225 million in settlement for all of its liability as described above;

· Each party is to bear the costs and expenses incurred in the litigation which, in the case of the State of New Jersey, is estimated to be in the range of $44 million to $50 million;

· DEP reserves all other rights against ExxonMobil with respect to liability for future cleanup and removal costs at the Bayway, Bayonne, and former Paulsboro facilities and at all ExxonMobil sites throughout the State of New Jersey; and

Whereas, The proposed settlement allows DEP to re-file a claim for damage to surface water bodies adjacent to or impacted by the Bayway and Bayonne facilities, but the DEP may do so only if it first prepares a complete natural resource damages assessment and identifies all parties who are potentially responsible for the contamination of surface waters in advance of re-filing a claim; and

Whereas, These requirements are an extra burden to the State, are unique to this settlement, and effectively amount to a de facto forfeiture of DEP’s claims for damage to surface waters; and

Whereas, At the Paulsboro facility, three groups of defendants were alleged to have been responsible for natural resource damages to groundwater, and in 2009 one of DEP’s experts estimated primary restoration costs of all groundwater to be $81 million, and another DEP expert estimated compensatory restoration costs to be $3.2 million; and

Whereas, One of DEP’s experts on the Paulsboro facility aspect of the case estimated ExxonMobil’s share of primary restoration costs to be $12.4 million, or about 15% of the total, and another DEP expert estimated ExxonMobil’s share for compensatory restoration costs to be between $300,000 and $2.1 million; and

Whereas, Little or no information has been made available to the public on the extent of natural resource damages that may have occurred at the various retail gas stations included in the proposed settlement; and

Whereas, The “Spill Compensation and Control Act,” at N.J.S.A.58:10-23.11e(2), requires that DEP shall, at least 30 days prior to its agreement to any administrative or judicially approved settlement, publish in the New Jersey Register and on its website the name of the case, the names of the parties to the settlement, the location of the property on which the discharge occurred, and a summary of the terms of the settlement, including the amount of any monetary payments made or to be made; and

whereas, The Commissioner of the DEP has indicated that he intends to provide public comments received by the DEP in response to the Notice of Proposed Settlement to the judge presiding over the case; and

whereas, That judge must ultimately decide that the proposed settlement is in the public interest; and

Whereas, After considering all public comments it receives, the DEP can decide to withdraw from the proposed settlement agreement if the comments disclose facts or considerations which show that the agreement is inadequate; and

Whereas, The Assembly Judiciary Committee has considered 56 days of trial transcripts, the post-trial briefs of both parties to the lawsuit, expert reports prepared for both parties, various legal opinions on natural resource damages, and earlier court rulings in the case, and has examined numerous documents in the DEP’s case file room with the understanding that an undetermined number of the documents were previously removed by the DEP because of the department’s assertion that they were privileged; and

Whereas, The Assembly Judiciary Committee has also held two public hearings where committee members heard from legal and environmental experts and a local official on the proposed settlement; and

Whereas, Both the Assembly Budget Committee and the Senate Budget and Appropriations Committee during their budget deliberations extensively questioned the Attorney General and the Commissioner of the DEP on the subject of the proposed settlement, although their testimony was limited by their self-proclaimed ethical and legal obligations concerning the case; and

Whereas, The proposed $225 million settlement agreement is inadequate because it fails to address the decades-long contamination of important ecological resources surrounding major metropolitan areas, and does not fairly compensate the State and the public for that contamination; and

Whereas, The Christie Administration has not fully disclosed the rationale for settling the case for approximately three percent of the $8.9 billion which DEP’s experts calculated to be the value of natural resource damages; and

Whereas, No verifiable rationale has been offered for the inclusion of the 16 ExxonMobil sites and the approximately 1,700 retail service stations unrelated to the litigation in the proposed settlement; and

Whereas, The Governor has a duty to protect the natural resources of the State, which are held in trust by the State for the people, and, consequently, must ensure that the proposed settlement agreement is withdrawn and that the State obtains the maximum compensation possible from Exxon; now, therefore,

Be It Resolved by the General Assembly of the State of New Jersey:

1. This House opposes the proposed $225 million settlement in a lawsuit brought by the State against ExxonMobil for natural resource damages caused by pollution at the Bayway and Bayonne oil refinery sites and at certain other ExxonMobil sites in New Jersey, because it is inadequate and thus violates the public trust.

2. The court presiding over the case of New Jersey Department of Environmental Protection v. Exxon Mobil Corporation, Docket No. UNN-L-3026-04, is respectfully urged to reject the proposed $225 million settlement agreement between the parties because the agreement shocks the conscience in light of undisputed evidence of significant damage to, and loss of, the State’s natural resources caused by pollution at the Bayway and Bayonne oil refinery sites and at certain other ExxonMobil sites in New Jersey.

3. The New Jersey Attorney General and the Commissioner of Environmental Protection are urged to withdraw immediately from the proposed $225 million settlement agreement because it is inadequate.

4. The Governor is respectfully urged to take all appropriate action to fully protect the natural resources of the State which are held in public trust, ensure that the proposed $225 million settlement agreement between the State and ExxonMobil is not finalized and is withdrawn, and direct the Attorney General and the Commissioner of Environmental Protection to obtain the maximum compensation possible from ExxonMobil for the devastating environmental damage incurred at the Bayway and Bayonne oil refinery sites and at certain other ExxonMobil sites in New Jersey.

5. Copies of this resolution, as filed with the Secretary of State, shall be transmitted by the Clerk of the General Assembly to the Superior Court judge presiding over the case of New Jersey Department of Environmental Protection v. Exxon Mobil Corporation, Docket No. UNN-L-3026-04, the Governor, the Attorney General, and the Commissioner of Environmental Protection.

STATEMENT

This resolution expresses the General Assembly’s opposition to the proposed $225 million settlement in a lawsuit brought by the State of New Jersey against ExxonMobil for natural resource damages at the Bayway and Bayonne oil refinery sites and at certain other sites in New Jersey.